Gold (XAU/USD) attracts some sellers during the Asian session on Friday and slides back below the $4,000 psychological mark, eroding a part of the previous day’s strong gains. The US Federal Reserve’s (Fed) hawkish tilt on Wednesday assists the US Dollar (USD) to preserve its strong gains registered over the past two day, to the highest level since early August, and turns out to be a key factor weighing on the non-yielding yellow metal.
Apart from this, the latest optimism over a de-escalation of trade tensions between the US and China – the world’s two largest economies – contributes to the offered tone surrounding the safe-haven Gold. However, concerns about economic risks stemming from a prolonged US government shutdown act as a headwind for the USD and could support the bullion, which remains on track to end on a positive note for the third consecutive month.
Daily Digest Market Movers: Gold bulls remain on the sidelines as hawkish Fed underpins USD
- The US Dollar holds steady near its highest level since early August, touched on Thursday amid the US Federal Reserve’s hawkish tilt, and exerts some pressure on the Gold price during the Asian session on Friday. In fact, Fed Chair Jerome Powell said that a further reduction in the policy rate at the December meeting is not a foregone conclusion.
- A high stakes meeting between US President Donald Trump and his Chinese counterpart Xi Jinping ended on a positive note. The US agreed to cut down tariffs against Chinese goods in exchange for China resuming US soybean purchases and keeping rare earths exports flowing. The optimism turns out to be another factor undermining the commodity.
- The US government shutdown has now entered its fifth week amid a deadlock in Congress on the Republican-backed funding bill, fueling economic concerns. This might hold back the USD bulls from placing aggressive bets, which, along with persistent geopolitical risk, could offer some support to the safe-haven precious metal and help limit further losses.
- Trump said on Thursday that he had ordered the US military to resume nuclear testing immediately. In response, Russia said that if the US resumes nuclear weapons testing it will do so too, sparking fears about a further escalation of the conflict. This, in turn, warrants some caution before positioning for any further depreciating move for the XAU/USD pair.
- In the absence of any relevant market moving economic releases due to the US government closure, traders will scrutinize comments from influential FOMC members for cues about the future rate-cut path. This will drive the USD demand and provide some impetus to the commodity, which remains on track to register gains for the third straight month.
Gold seems vulnerable while below $4,050 pivotal resistance
The XAU/USD pair did find acceptance above the 23.6% Fibonacci retracement level of the recent corrective decline from the all-time high, though it lacks follow-through and remains below the $4,050 key hurdle. The said area could act as a key pivotal point, above which a fresh bout of short-covering could lift the Gold price beyond the $4,075 region (38.2% Fibo. level), towards the $4,100 mark.
On the flip side, any further weakness could find some support near the $3,950 area ahead of the $3,917-3,916 region and the $3,900 round figure. Some follow-through selling below the $3,886 zone, or an over three-week low touched on Tuesday, could make the Gold price vulnerable to accelerate the fall towards the $3,850-3,845 zone en route to the $3,800 mark and the next relevant supports near the $3,765-3,760 zone.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.58% | 1.31% | 0.66% | -0.13% | -0.07% | 0.93% | 0.67% | |
| EUR | -0.58% | 0.74% | 0.14% | -0.71% | -0.58% | 0.35% | 0.09% | |
| GBP | -1.31% | -0.74% | -0.69% | -1.44% | -1.30% | -0.39% | -0.68% | |
| JPY | -0.66% | -0.14% | 0.69% | -0.87% | -0.81% | 0.15% | -0.09% | |
| CAD | 0.13% | 0.71% | 1.44% | 0.87% | 0.00% | 1.07% | 0.76% | |
| AUD | 0.07% | 0.58% | 1.30% | 0.81% | -0.01% | 0.92% | 0.62% | |
| NZD | -0.93% | -0.35% | 0.39% | -0.15% | -1.07% | -0.92% | -0.29% | |
| CHF | -0.67% | -0.09% | 0.68% | 0.09% | -0.76% | -0.62% | 0.29% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).